In a sign we’re experiencing a calm before the storm, new data shows the Canadian property market is edging slightly down as buyers welcome a reduction in our 20-year-high interest rate.
While the Bank of Canada’s 0.25% interest rate reduction will not substantially move the market, the BoC’s declared intention to reduce mortgage costs has already had a stimulating effect.
Its June move to reduce the rate to 4.75% – the first reduction in four years – was not in time to influence the latest property data from the Canadian Real Estate Association (CREA).
It found home sales were down 0.6% in May compared with April.
This comes on the back of a 1.7% fall in home sales in April compared with March.
However, the good news for buyers was that newly listed homes were up by 0.5%.
Separately, the MLS Home Price Index (HPI) dipped 0.2%.
The CREA’s senior economist Shaun Cathcart believes the June data will show a more active market due to the rate reduction.
However, he cautioned buyers against expecting rates to fall to their super-low levels of the Covid period when we needed to stimulate the economy. As we all know, that strategy provoked break-out inflation, pushing interest rates to prohibitive levels to quell the rising cost of living.
The MLS data shows we have 175,000 properties for sale, a near-25% increase from 12 months ago.
The national average sale price was $699,117, a -4% dip on May 2023.
In April, the national average home price was $703,446, down -1.8% compared to the previous 12 months.
Below, we have given four quick pieces of advice for sellers in the current market.
We believe the market is about to turnaround, and this is how sellers and upgraders should be thinking about their sales strategy:
- Price it right: Don’t overprice in hopes of catching the upswing. A competitive price attracts early buyers.
- Market strategically: Highlight the signs of market recovery in your listings and marketing materials.
- Stage to impress: A well-presented home shines brighter when competition is returning.
- Act decisively: The early bird catches the worm in a rebounding market. Be ready to negotiate and close quickly. It will give you a chance to finalise your next purchase before a full recovery in the market is underway.